Jackson, C. and Orr, A. (2019) Investment decision-making under economic policy uncertainty. Journal of Property Research, 36 (2). pp. 153-185. ISSN 0959-9916
Abstract
It is widely established that economic policy uncertainty (EPU) affects investment decisions and performance, yet research in this area has overlooked the direct property investment market. This article seeks to rectify this and proposes a multistage multilevel analytical framework to offer new insights and a richness of findings. Using a news-based measure of EPU in the United Kingdom, and controlling for economic conditions, a national-level analysis reveals some evidence of Granger-Causality between EPU and total returns, indicating that pricing is responsive to uncertainty. These findings suggest that EPU is an important risk factor for direct property investments, with pricing implications. Differences in data and performance measure are important, however, with income returns unresponsive. A micro-level investigation begins to reveal some of the asset-pricing decisions underpinning the national results, indicating investors’ concerns for income streams are consistently high, regardless of varying EPU. Pricing can also cause changes in EPU, such as in the retail and industrial markets (increasingly linked through logistics) reflecting sector-specific stakeholder groups and newsworthy issues. This evidence highlights how important it is for policy-makers to understand the complex and bi-directional relationship, that indecision can undermine investment confidence and cause investment market volatility, in turn raising EPU.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2019 Informa UK Limited, trading as Taylor & Francis Group. This is an author produced version of a paper subsequently published in Journal of Property Research. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Economic policy uncertainty; commercial real estate; investor decision-making; investor behaviour; conjoint analysis |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Urban Studies & Planning (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 03 Apr 2019 09:34 |
Last Modified: | 19 Sep 2020 00:38 |
Status: | Published |
Publisher: | Taylor & Francis |
Refereed: | Yes |
Identification Number: | 10.1080/09599916.2019.1590454 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:144451 |